The federal cabinet on Wednesday approved the formation of a holding company for the privatization of Pakistan International Airlines (PIA).
The cabinet meeting was chaired by Prime Minister Shehbaz Sharif while senior government officials including Federal Minister for Finance and Revenue Muhammad Aurangzeb also participated in the session today.
The meeting participants viewed the formation of a holding company for the privatization of PIA as a big step.
Authorities working on the privatization process have been trying hard for years to spin the carrier’s debts into a separate entity.
This is in accordance with financial advisor Ernst & Young’s privatization plan submitted to the caretaker government on December 27, 2023, which recommended that government-guaranteed legacy debt and payables held by a consortium of seven local banks, would be parked in a holding company.
Finance Minister Muhammad Aurangzeb briefed on the Staff Level Agreement (SLA) with the International Monetary Fund (IMF). He said the SLA will have a positive impact on the country’s economy and enhance investor confidence.
Meanwhile, the federal cabinet decided to renounce their salaries and benefits to promote austerity.
The IMF last week demanded Pakistan to present a comprehensive plan for the privatization of PIA and other state-owned enterprises.
Talks are heating up between the federal government and banks to finalize the terms of a loan agreement for the privatization of PIA. There could be an agreement on an interest rate of up to 12 percent through term sheets with commercial banks.
Once the loan term sheet agreement is settled, banks will issue No Objection Certificates (NOCs) to proceed with the process.
